The short answer is "No".
I've come up with a workaround that I find acceptable (although I sure wish M$ would fix this, too). There is no other Windows application I am aware of where if you maximize the window the cursor suddenly becomes trapped inside that window. This is a ridiculous "feature" and and the engineers who have allowed this should be taken "out back the woodshed".
Apparently no one ever considered people might want to watch TV and surf the 'net at the same time. MCE was obviously not designed for systems with two monitors (which I find unbelievable for a product released in 2005).
What I do is keep the MCE window minimized -- but I stretch it out to it's maximum dimensions so that it covers the entire monitor. Most TV related tasks are accessible thru the remote when other windows have focus but for some functions, MCE must have focus. This can be achieved by pressing the green button once (which of course steals focus from your other applications -- so good luck working on the computer if SOMEONE ELSE has the remote!).
Obviously, with the MCE window minimized you still have that annoying blue border to deal with. That border makes for some pretty ugly TV watching.
My workaround involves using my video card driver software (nVidia ForceWare version 81.98 for my GeForce 6800) to "Stretch" the blue border beyond the visible edges of my display. In other words, I zoom in on the center of the window until the blue borders disappear.
With an nVidia driver, follow these steps.
[1] Reduce the MCE window from the maximized state (i.e. "Restore") and drag to the top left edge of the desktop (on the monitor you want to view MCE "full screen").
[2] Click & Drag the bottom left edge of the MCE window until the entire desktop is covered. (It helps to NOT extend the taskbar across both monitors, and run MCE on the second monitor).
[3] Open the Display Settings panel, highlight your secondary display, click "Device Settings" and then select "Device Adjustments" as shown:
You'll see this window:
Under "Screen Positioning" Click the "+" sign to "Zoom" the blue borders beyond the visible edge of your display -- adjust left/right & up/down as necessary with the arrow bars.
THAT's IT! Now whenever you run MCE, the window will still be minimized (freezing your mouse) but will APPEAR to be maximized! Still a pain in the rear end, but at least it provides enough performace to keep me from ditching the OS altogether.
While you're there, it might be a good idea to take the time to adjust your video contrast, brightness, sharpness, et.al. to match as closely as possible the non-processed feed from your regular TV provider. You can again use the page shown above and this one below:
Good Luck, and Blue Skies!